Preparing your Canadian Registered Charity for a CRA Audit

If you anticipate that your charity is going to be audited by the Charities Directorate of CRA you may wish to review my article Canada Revenue Agency (CRA) Audits and Canadian Registered Charities at http://www.globalphilanthropy.ca/images/uploads/Canadian_Charities_and_Audits_by_the_Canada_Revenue_Agency.pdf  Here is a copy of an example of a Required Information and Documentation Letter from CRA which gives you an idea of some of the information that the CRA may initially request.

REQUIRED INFORMATION AND DOCUMENTATION

[NAME OF CANADIAN REGISTERED CHARITY]

Fiscal year to be audited; [Fiscal year end] 2007 and 2008

In order to complete the audit, please have the following documentation available at the commencement of the field visit. This list is non-exhaustive, and additional information may be requested during the review.

Financial
1) The Charity’s books and records for the fiscal period including
• general ledger and general journal
• cash receipts/disbursements journals
• bank statements
• cancelled cheques
• deposit books
• duplicate official donation receipts

2) Reconciliation of the financial statements to the amounts reported on the T301OA.

3) Cash gifts: a listing of donation receipts issued containing the receipt number, date,
donor name and amount.

4) Gifts-in-kind (ie. art, wine, jewellery, comics, timeshares, etc.): a listing official donation receipts issued containing the receipt number, date, donor name and address, amount, description of property, and a copy of the appraisal (including name and address of the appraiser). If an appraisal of the property was not completed, provide details as to how the fair market value of the gift was determined (if applicable).

5) A reconciliation of official donation receipts issued to the Information Return –Line 4500 of the T30l0A.

6) Copies of appraisals and 10-year directions (if applicable).

7) A listing of the gifts (including gifts-in-kind) received from other registered charities, containing the charity’s name, registration number, description of the gift received) and the name and address of the appraiser (if applicable).

8) A reconciliation of disbursements per the financial statements to the T3010A (Lines 4800-4920 and Lines 5000-5040, including a breakdown of items in Line 5000). Invoices pertaining to all expenditures should be available for review.

9) Copies of all T4/T4A slips and T4 Summaries pertaining to the fiscal period reviewed and supporting working papers (if applicable).

10) A list of the fixed assets and related purchase invoices.

11) All agreements pertaining to leases, agency agreements, employment and management fees and any other agreements in place relating to activities outside of Canada.

12) A list of all related parties and details of any transactions between organization and themselves,

13) Copies of promotional material utilized by the organization, such as pamphlets, photos, CDs, videos, etc. Also, copies of printed material relating to the organization’s activities and different projects.

Organizational

1) Minute Books.
2) Minutes of all directors, committee and sub-committee meetings.

Objects and Activities
1) A copy of the organization’s governing documents and all amendments made thereto.

2) Written description of programs and activities with respect to the purpose and mandate.

3) Any weekly/monthly/annual newsletters.

——

Mark Blumberg is a lawyer at Blumberg Segal LLP in Toronto, Ontario.  To find out more about legal services that Blumbergs provides to Canadian charities and non-profits please visit http://www.canadiancharitylaw.ca or http://www.globalphilanthropy.ca He can be contacted at .(JavaScript must be enabled to view this email address) or at 416-361-1982.

This article is for information purposes only. It is not intended to be legal advice. You should not act or abstain from acting based upon such information without first consulting a legal professional.